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ECB could move quickly on funding Greek banks after a deal

Greek banks could get access to cheap European Central Bank funding again soon after Athens clinches a deal with creditors, sources have told Reuters, bringing relief to troubled lenders after almost a year on an expensive liquidity lifeline.

Once Greece wraps up talks with international creditors, the ECB could waive its minimum credit rating requirement on Greek debt within days or weeks, two sources said.

The previous waiver was ditched last year when Greece almost tumbled out of the eurozone, refusing to meet its bailout commitments and exacerbating its debt crisis.

A renewed waiver, meanwhile, would also make Greek bonds eligible for the ECB’s quantitative easing program, an 80-billion-euro-per-month hallmark asset buying scheme, the sources said.

However, Athens would need to pass a debt sustainability review before any actual purchases, they said.

Although the ECB normally requires investment grade credit rating to be in quantitative easing, countries in formal bailout programs can receive an exemption from this requirement.

“The waiver would reduce banks’ reliance on [higher costing] Emergency Liquidity Assistance, make them eligible for some ECB funding, improve their balance sheet and impact confidence,” one of the sources, who declined to be named, said.